A Brazilian airliner has crashed and burst into flames at Brazil's busiest airport, with as many as 200 people feared dead in the country's second major air disaster in less than a year.

None of the 176 people on board the Airbus A320 are likely to have survived, Sao Paulo state Governor Jose Serra says.

Brazilian news agency Folha quoted the leader of a rescue crew as saying there could be 200 people dead, including casualties on the ground.

The plane, flying from Porto Alegre in southern Brazil, lost control on landing in Sao Paulo's Congonhas airport.

It skidded off the rain-soaked runway and flew over a bustling avenue just below, slamming into a petrol station and cargo terminal where people were working.

"The plane came spinning and passed over our heads at the level of the street lights. We could hear the engine noise getting louder and the plane growing in front of us. When it hit the ground it exploded sending pieces all around," Luis Santos said, who was in his car at the petrol station at the time.

Dozens of ambulances raced to the crash site and television images showed the plane's tail sticking out from the cargo terminal in flames as firefighters tried to put out the blaze, which spread to a neighbouring building.

Government officials say the body of one man was removed from the site.

Globo News TV says two other bodies have also been recovered.

Two local hospitals say they are treating at least seven people for injuries.

The plane, operated by Brazil's number one airline TAM Linhas Aereas, was carrying 170 passengers and six crew.

At least one of the passengers was a prominent congressman, an aide told Reuters.

In September, 154 people were killed when a Brazilian Boeing 737 collided with a small executive jet and crashed in the Amazon jungle in what was the worst air accident in the country's history.

Congonhas airport, located in the heart of South America's largest city, has had runway problems for years and recently repaved one of its landing strips.

Earlier this year, officials tried to ban wide-bodied jets from the airport because of fears they could skid off its short landing strips.

Air travel in Brazil has repeatedly been disrupted since the September crash unveiled a series of problems, including insufficient infrastructure and overburdened, underpaid staff.

Last month, two passenger planes clipped wings while taxiing at Congonhas, increasing concerns about safety.